TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 133

CONFIDENTIAL

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understand that in the discussions in China repeated reference

was made to offers of aid from other European countries, a point

underlined in Sir Percy Craddock's latest despatch from Peking.

Continuation Sheet No.

3

File No.

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The Chinese were first to refer to the political significance

of the project in strengthening links between China and Hong Kong.

My officials also emphasised the political aspects of the project,

and ascertained that the Chinese considered the participation of

China Light and Power Ltd to be essential, both for the management

of the project during construction and operation, and also for the

purchase of electricity. An off-take agreement with CLP would be

essential to generate the necessary foreign exchange for the

repayment of loans. Lord Kadoorie, Chairman of CLP, remains

strongly in favour of the project because of its political

significance, and CLP is prepared to purchase the electricity from

the station provided it is cheaper than can be generated from coal

in Hong Kong. The Hong Kong Government is prepared to permit the

signature of this agreement and the Governor of Hong Kong has told

my senior official privately that he will speak in favour of the

In

project with the Executive Council at the appropriate time.

However, Exxon, who have a 60% holding in CLP's generation companies,

T

is known to have reservations about the project because of the dav bion

dilution of management effort from the completion of the Castle Peak

projects to this complex project, and also because of the risk to

Their

the return on its investment in the Castle Peak projects from the

purchase of potentially cheaper electricity from China.

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The following issues will have to be considered by officials

before I will be able to make a further submission, with recommendations,

to you:

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